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New Developments in Switzerland's Insolvency Law

The Swiss government presented a draft bill in May 2017 which was approved by the Swiss Council of States in December 2017 with very few amendments. The revised law could be effective as from 1 January 2019 if the Swiss National Council approves the revision this year.

Key changes include:

Provided that a debtor was not domiciled in Switzerland at the point in time when insolvency proceedings were opened, foreign judgments will now be recognised not only if they handed down in the place of the debtor's domicile, but also the state in which the debtor's Centre of Main Interests is situated.

There is also a plan to abolish the reciprocity requirement which will further facilitate and simplify the recognition of foreign insolvency proceedings. Currently it can be expensive and time-consuming to demonstrate that the state in question grants reciprocity as one must rely on legal opinions if there is no precedent in that state.

There will no longer be a requirement for secondary insolvency proceedings to be opened in Switzerland by a foreign insolvency practitioner and will only be required if there are certain privileged Swiss debts. Foreign insolvency practitioners shall be entitled to exercise all of the powers conferred by the law of the state in which insolvency proceedings were opened, in particular this will allow assets to be moved out of Switzerland and give foreign insolvency practitioners rights to sue in Switzerland.

Further amendments would mean creditors of a Swiss branch of the foreign debtor no longer have to submit their claims in dedicated branch insolvency proceedings. They would be able to submit their claims in the secondary insolvency proceedings, avoiding duplication and further complications.

Foreign judgments in insolvency proceedings, such voidable preference, could in principle be recognized in Switzerland which is not currently the case.

There is also a proposed legal basis for coordination between Swiss and foreign insolvency authorities.

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